New Delhi: The government on Monday announced the removal of excise duty on goods for manufacturing point-of-sale (PoS) machines that are in great demand as merchants are compelled to use them in the wake of the currency crisis.

“POS machines will be exempted from 12.5% excise duty and 4% SAD (special additional duty) till 31 March 2017,” said a person aware of the matter, adding that the cost of such devices would come down by 16.5%.

A notification to this effect was tabled by finance minister Arun Jaitley in Lok Sabha on Monday amid uproar over the demonetisation issue. The notification “exempts Central Excise/CV duty on all goods for manufacture of PoS devices subject to actual user condition and these exemptions will be valid till 31 March 2017”.

With most people left scrounging for money after the surprise withdrawal of Rs500 and Rs1,000 notes on 8 November, PoS service providers have registered a record surge in the volume of transactions as well as the number of applications from merchants.

“Removal of excise duty on PoS manufacturing is a big step forward. The country took five years to add last one million terminals. The government now plans to bring one million terminals in the next three months. It would certainly accelerate usage of cards on PoS,” said A. P. Hota, managing director and chief executive, National Payments Corporation of India (NPCI).

The PoS machines are hand-held devices that are being increasingly used by merchants to accept payments for goods sold through credit and debit cards.

“This will give a boost to the cashless economy as more and more PoS machines will be deployed. People find PoS machines any day convenient, because it only needs GPRS connectivity for transactions to be assessed, hence overall it is a positive move,” said Deepak Arora, POS Solutions’ regional head for north and east India.

Abhijit Bose, chief executive of Ezetap, a PoS device-making start-up, said, “The entire ecosystem is working together to ensure that the prime minister’s vision is implemented as quickly and effectively as possible. It is a positive move in the short run resulting in immediate benefits. Since our PoS devices are made-in-India, we have to review the final language to see how much it will benefit us in the long-run.”